Can ‘Prostsahan Agrim’ and GST Be Deducted from Retiral Dues? Allahabad High Court Says No

The Allahabad High Court recently expressed its “shock” to learn that deductions had been made from the retiral dues of an employee of the U.P. State Employees Welfare Corporation under the heads of “Prostsahan Agrim”, “Tyohar Agrim” and GST, observing that there was no provision permitting such deductions.

Court directed that the entire retiral dues be cleared within one month without making any deduction, along with arrears of salary, failing which the Executive Director of the corporation will have to appear for framing of charge in the contempt case.

The bench of Justice Rohit Ranjan Agarwal was hearing a contempt application filed by Satish Kumar Verma against Shri Kamta Prasad, Executive Director of the corporation, alleging non-compliance of earlier directions of the writ court regarding payment of retiral benefits and salary arrears.

Referring to a compliance affidavit dated July 6, 2025, court noted that the total retiral dues payable to the applicant were stated to be Rs. 15,71,604. However, deductions amounting to Rs. 4,55,100.38 had been made, including Rs. 2,90,185 towards “Prostsahan Agrim”, Rs. 28,900 towards “Tyohar Agrim”, Rs. 56,253.38 towards GST recovery and Rs. 79,762 towards audit recovery. After these deductions, Rs. 11,16,504 was approved and paid to the applicant.

Court observed that there was no provision for deducting “Prostsahan Agrim”, “Tyohar Agrim” or GST from the retiral dues of an employee of the corporation. It further recorded that funds received from the state government through a soft loan for payment of retiral dues had not been properly disbursed to employees.

On January 21, 2026, the court had taken note of the dismissal of a special appeal filed by the corporation on November 7, 2025. At that stage, counsel for the corporation had submitted that while part of the retiral dues had been paid, arrears of salary could not be cleared due to a financial crunch. Court had directed the Executive Director to file a personal affidavit disclosing the outstanding amounts payable towards arrears of salary and retiral dues and the time period within which the dues would be paid, warning that failure to do so would require his personal appearance.

When the matter was taken up on February 12, a personal affidavit was filed. However, court found that the affidavit did not disclose the correct figures of outstanding arrears of salary payable to the applicant and did not clearly set out the total amount paid, except for referring to the earlier compliance affidavit.

Holding that the Executive Director was “buying time” and misleading the court by not paying employees their retiral dues and salary to which they were entitled, the court granted what it termed a last opportunity. It directed that within one month and no more, the entire retiral dues be cleared without any deduction and arrears of salary be paid. In case of non-compliance, the Executive Director shall remain present in court on March 19, 2026 for framing of charge.

Court also directed the Principal Secretary, Food and Civil Supplies, U.P. Government, to investigate why employees of the corporation had not been paid their retiral dues and salary as directed by the writ court, and to file a personal affidavit detailing the action taken against the defaulting officers.

Case Title: Satish Kumar Verma vs. Shri Kamta Prasad, Executive Director, U.P. State Employees Welfare Corporation

Order Date: February 12, 2026

Bench: Justice Rohit Ranjan Agarwal